Divide

question 61

Multiple Choice

Divide:

Understand the function and impact of System 1 and System 2 in decision-making processes.

Recognize the effects of heuristics on human cognition and decision-making.

Identify the principles of behavioral economics, including prospect theory and the endowment effect.

Comprehend the role and influence of framing and anchoring effects in consumer behavior.

---

Definitions:

Bank Discount

What the bank charges to hold a note until maturity (Maturity Value – Proceeds).

Discount Period

The window of time during which a payment can be made at a reduced rate.

Maturity Value

Maturity value is the amount payable to an investor at the end of a debt instrument's holding period or its maturity date, including principal and interest.

Bank Discount

An interest deduction made in advance from a loan amount by the lender, often used in the context of Treasury bills.